"Sec. 1   RCW 82.16.110 and 2009 c 469 s 504 are each amended to read as follows:
     The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Administrator" means an owner and assignee of a community solar project as defined in subsection (2)(a)(i) of this section that is responsible for applying for the investment cost recovery incentive on behalf of the other owners and performing such administrative tasks on behalf of the other owners as may be necessary, such as receiving investment cost recovery incentive payments, and allocating and paying appropriate amounts of such payments to the other owners.
     (2)(a) "Community solar project" means:
     (i) A solar energy system that produces a maximum instantaneous power output of one megawatt of electricity and is owned by local individuals, households, nonprofit organizations, or nonutility businesses that is placed on the property owned by a cooperating local governmental entity that is not in the light and power business or in the gas distribution business; ((or))
     (ii) A utility-owned solar energy system that produces a maximum instantaneous power output of one megawatt of electricity and that is voluntarily funded by the utility's ratepayers where, in exchange for their financial support, the utility gives contributors a payment or credit on their utility bill for the value of the electricity produced by the project;
     (iii) A solar energy system, placed on the property owned by a cooperating local governmental entity that is not in the light and power business or in the gas distribution business, that produces a maximum instantaneous power output of one megawatt of electricity, and that is owned by a limited liability company whose members are each eligible for an investment cost recovery incentive for the same customer-generated electricity as provided in RCW 82.16.120; or
     (iv) A virtual net metering system, as defined in RCW 80.60.010, that uses solar energy to generate electricity and the customer-generators participating in virtual net metering are assigned fractions or shares by a net metering aggregator as determined under RCW 80.60.010 through 80.60.030.
     (b) For the purposes of "community solar project" as defined in (a) of this subsection:
     (i) "Nonprofit organization" means an organization exempt from taxation under ((Title)) 26 U.S.C. Sec. 501(c)(3) of the federal internal revenue code of 1986, as amended, as of January 1, 2009; and
     (ii) "Utility" means a light and power business, an electric cooperative, or a mutual corporation that provides electricity service.
     (((2))) (3) "Customer-generated electricity" means a community solar project or the alternating current electricity that is generated from a renewable energy system located in Washington and installed on an individual's, businesses', or local government's real property that is also provided electricity generated by a light and power business. Except for community solar projects, a system located on a leasehold interest does not qualify under this definition. Except for utility-owned community solar projects, "customer-generated electricity" does not include electricity generated by a light and power business with greater than one thousand megawatt hours of annual sales or a gas distribution business.
     (((3))) (4) "Economic development kilowatt-hour" means the actual kilowatt-hour measurement of customer-generated electricity multiplied by the appropriate economic development factor.
     (((4))) (5) "Local governmental entity" means any unit of local government of this state including, but not limited to, counties, cities, towns, municipal corporations, quasi-municipal corporations, special purpose districts, and school districts.
     (((5))) (6) "Photovoltaic cell" means a device that converts light directly into electricity without moving parts.
     (((6))) (7) "Renewable energy system" means a solar energy system, an anaerobic digester as defined in RCW 82.08.900, or a wind generator used for producing electricity.
     (((7))) (8) "Solar energy system" means any device or combination of devices or elements that rely upon direct sunlight as an energy source for use in the generation of electricity.
     (((8))) (9) "Solar inverter" means the device used to convert direct current to alternating current in a photovoltaic cell system.
     (((9))) (10) "Solar module" means the smallest nondivisible self-contained physical structure housing interconnected photovoltaic cells and providing a single direct current electrical output.

Sec. 2   RCW 82.16.120 and 2009 c 469 s 505 are each amended to read as follows:
     (1)(a) Any individual, business, local governmental entity, not in the light and power business or in the gas distribution business, or a participant in a community solar project may apply to the light and power business serving the situs of the system, each fiscal year beginning on July 1, 2005, for an investment cost recovery incentive for each kilowatt-hour from a customer-generated electricity renewable energy system.
     ((No incentive may be paid for kilowatt-hours generated before July 1, 2005, or after June 30, 2020.))
     (b) In the case of a community solar project as defined in RCW 82.16.110(2)(a)(i), the administrator must apply for the investment cost recovery incentive on behalf of each of the other owners.
     (c) In the case of a community solar project as defined in RCW 82.16.110(2)(a)(iii), the limited liability company owning the community solar project must apply for the investment cost recovery incentive on behalf of each member of the limited liability company.
     (d) In the case of a community solar project as defined in RCW 82.16.110(2)(a)(iv), the net metering aggregator must apply for the investment cost recovery incentive on behalf of each customer-generator.
     (2)(a) Before submitting for the first time the application for the incentive allowed under subsection (4) of this section, the applicant must submit to the department of revenue and to the climate and rural energy development center at the Washington State University, established under RCW 28B.30.642, a certification in a form and manner prescribed by the department that includes, but is not limited to, the following information:
     (i) The name and address of the applicant and location of the renewable energy system.
     (A) If the applicant is an administrator of a community solar project as defined in RCW 82.16.110(2)(a)(i), the certification must also include the name and address of each of the owners of the community solar project.
     (B) If the applicant is a limited liability company that owns a community solar project as defined in RCW 82.16.110(2)(a)(iii), the certification must also include the name and address of each member of the limited liability company.
     (C) If the applicant is a virtual net metering aggregator as defined RCW 82.16.110(2)(a)(iv), the certification must also include the name and address of each customer-generator participating in virtual net metering;
     (ii) The applicant's tax registration number;
     (iii) That the electricity produced by the applicant meets the definition of "customer-generated electricity" and that the renewable energy system produces electricity with:
     (A) Any solar inverters and solar modules manufactured in Washington state;
     (B) A wind generator powered by blades manufactured in Washington state;
     (C) A solar inverter manufactured in Washington state;
     (D) A solar module manufactured in Washington state; or
     (E) Solar or wind equipment manufactured outside of Washington state;
     (iv) That the electricity can be transformed or transmitted for entry into or operation in parallel with electricity transmission and distribution systems; and
     (v) The date that the renewable energy system received its final electrical permit from the applicable local jurisdiction.
     (b) Within thirty days of receipt of the certification the department of revenue must notify the applicant by mail, or electronically as provided in RCW 82.32.135, whether the renewable energy system qualifies for an incentive under this section. The department may consult with the climate and rural energy development center to determine eligibility for the incentive. System certifications and the information contained therein are subject to disclosure under RCW 82.32.330(3)(m).
     (3)(a) By August 1st of each year application for the incentive ((shall)) must be made to the light and power business serving the situs of the system by certification in a form and manner prescribed by the department that includes, but is not limited to, the following information:
     (i) The name and address of the applicant and location of the renewable energy system.
     (A) If the applicant is an administrator of a community solar project as defined in RCW 82.16.110(2)(a)(i), the application must also include the name and address of each of the owners of the community solar project.
     (B) If the applicant is a limited liability company that owns a community solar project as defined in RCW 82.16.110(2)(a)(iii), the application must also include the name and address of each member of the limited liability company;
     (ii) The applicant's tax registration number;
     (iii) The date of the notification from the department of revenue stating that the renewable energy system is eligible for the incentives under this section; and
     (iv) A statement of the amount of kilowatt-hours generated by the renewable energy system in the prior fiscal year.
     (b) Within sixty days of receipt of the incentive certification the light and power business serving the situs of the system ((shall)) must notify the applicant in writing whether the incentive payment will be authorized or denied. The business may consult with the climate and rural energy development center to determine eligibility for the incentive payment. Incentive certifications and the information contained therein are subject to disclosure under RCW 82.32.330(3)(m).
     (c)(i) Persons receiving incentive payments ((shall)) must keep and preserve, for a period of five years, suitable records as may be necessary to determine the amount of incentive applied for and received. Such records ((shall)) must be open for examination at any time upon notice by the light and power business that made the payment or by the department. If upon examination of any records or from other information obtained by the business or department it appears that an incentive has been paid in an amount that exceeds the correct amount of incentive payable, the business may assess against the person for the amount found to have been paid in excess of the correct amount of incentive payable and ((shall)) must add thereto interest on the amount. Interest ((shall be)) is assessed in the manner that the department assesses interest upon delinquent tax under RCW 82.32.050.
     (ii) If it appears that the amount of incentive paid is less than the correct amount of incentive payable the business may authorize additional payment.
     (4) Except for community solar projects, the investment cost recovery incentive may be paid fifteen cents per economic development kilowatt-hour unless requests exceed the amount authorized for credit to the participating light and power business. For community solar projects, the investment cost recovery incentive may be paid thirty cents per economic development kilowatt-hour unless requests exceed the amount authorized for credit to the participating light and power business. For the purposes of this section, the rate paid for the investment cost recovery incentive may be multiplied by the following factors:
     (a) For customer-generated electricity produced using solar modules manufactured in Washington state, two and four-tenths;
     (b) For customer-generated electricity produced using a solar or a wind generator equipped with an inverter manufactured in Washington state, one and two-tenths;
     (c) For customer-generated electricity produced using an anaerobic digester, or by other solar equipment or using a wind generator equipped with blades manufactured in Washington state, one; and
     (d) For all other customer-generated electricity produced by wind, eight-tenths.
     (5)(a) No individual, household, business, or local governmental entity is eligible for incentives provided under subsection (4) of this section for more than five thousand dollars per year.
     (b) Except as provided in (c) and (d) of this subsection (5), each applicant in a community solar project is eligible for up to five thousand dollars per year.
     (c) Where the applicant is an administrator of a community solar project as defined in RCW 82.16.110(2)(a)(i), each owner is eligible for an incentive up to five thousand dollars per year.
     (d) Where the applicant is a limited liability company owning a community solar project that has applied for an investment cost recovery incentive on behalf of its members, the limited liability company is eligible for an incentive up to five thousand dollars per year.
     (6) Owners in a community solar project are eligible to receive an investment cost recovery incentive based on the total customer-generated electricity produced by the project but only in proportion to each ownership share or, in the case of a utility-owned community solar project, in proportion to each ratepayer's contribution. No owner in a community solar project is eligible for incentives under this section for more than five thousand dollars.
     (7) If requests for the investment cost recovery incentive exceed the amount of funds available for credit to the participating light and power business, the incentive payments ((shall)) must be reduced proportionately.
     (((7))) (8) The climate and rural energy development center at Washington State University energy program may establish guidelines and standards for technologies that are identified as Washington manufactured and therefore most beneficial to the state's environment.
     (((8))) (9) The environmental attributes of the renewable energy system belong to the applicant, and do not transfer to the state or the light and power business upon receipt of the investment cost recovery incentive.
     (10) No incentive may be paid under this section for kilowatt-hours generated before July 1, 2005, or after June 30, 2020.

NEW SECTION.  Sec. 3   A new section is added to chapter 82.16 RCW to read as follows:
     Owners of a community solar project as defined in RCW 82.16.110(2)(a) (i) and (iii) must agree to hold harmless the light and power business serving the situs of the system, including any employee, for the good faith reliance on the information contained in an application or certification submitted by an administrator or limited liability company. In addition, the light and power business and any employee is immune from civil liability for the good faith reliance on any misstatement that may be made in such application or certification. Should a light and power business or employee prevail upon the defense provided in this section, it is entitled to recover expenses and reasonable attorneys' fees incurred in establishing the defense.

Sec. 4   RCW 80.60.010 and 2007 c 323 s 1 are each amended to read as follows:
     The definitions in this section apply throughout this chapter unless the context clearly ((indicates)) requires otherwise.
     (1) "Commission" means the utilities and transportation commission.
     (2) "Customer-generator" means either: (a) A user of a net metering system located on the premises of a customer-generator; or (b) a customer of an electric utility participating in virtual net metering.
     (3) "Electrical company" means a company owned by investors that meets the definition of RCW 80.04.010.
     (4) "Electric cooperative" means a cooperative or association organized under chapter 23.86 or 24.06 RCW.
     (5) "Electric utility" means any electrical company, public utility district, irrigation district, port district, electric cooperative, or municipal electric utility that is engaged in the business of distributing electricity to retail electric customers in the state.
     (6) "Irrigation district" means an irrigation district under chapter 87.03 RCW.
     (7) "Meter aggregation" means the administrative combination of readings from and billing for all meters, regardless of the rate class, on premises owned or leased by a customer-generator located within the service territory of a single electric utility.
     (8) "Municipal electric utility" means a city or town that owns or operates an electric utility authorized by chapter 35.92 RCW.
     (9) "Net metering" means measuring the difference between the electricity supplied by an electric utility and the electricity generated by a customer-generator over the applicable billing period.
     (10) "Net metering system" means a fuel cell, a facility that produces electricity and used and useful thermal energy from a common fuel source, or a facility for the production of electrical energy that generates renewable energy, and that:
     (a)(i) For electric utilities that are not full requirements customers, has an electrical generating capacity of not more than one ((hundred kilowatts)) megawatt; or
     (ii) For electric utilities that are full requirements customers, either: (A) Has an electrical generating capacity of no more than one hundred ninety-nine kilowatts and is metered by one meter; or (B) has an electrical generating capacity of up to one megawatt and is metered by multiple meters with no one meter measuring more than one hundred ninety-nine kilowatts in electrical generating capacity;
     (b) Is located on the customer-generator's premises or, for virtual net metering, is located within the same electric distribution system of the customer-generator;
     (c) Operates in parallel with the electric utility's transmission and distribution facilities; and
     (d) Is intended primarily to offset part or all of the customer-generator's requirements for electricity.
     (11) "Premises" means any residential property, commercial real estate, or lands, owned or leased by a customer-generator within the service area of a single electric utility.
     (12) "Port district" means a port district within which an industrial development district has been established as authorized by Title 53 RCW.
     (13) "Public utility district" means a district authorized by chapter 54.04 RCW.
     (14) "Renewable energy" means energy generated by a facility that uses water, wind, solar energy, or biogas from animal waste as a fuel.
     (15) "Virtual net metering" means the administrative combination of readings from the production meter, or meters when the net metering system is connected to the distribution system of an electric utility that is a full requirements customer, of a single net metering system and billing for multiple meters, regardless of class, from a group of customer-generators according to either an assigned fraction, share, or net meter reading of that net metering system for each customer-generator as contracted with a virtual net metering aggregator. The net metering system and the group of customer-generators must all be within the same electric distribution system.
     (16) "Virtual net metering aggregator" means an entity that:
     (a) Is responsible for professionally managing the net metering system for the life of the project;
     (b) Acts as the sole point of contact with the electric utility, responsible for calibrating, maintaining, and communicating to the electric utility a list of assigned fractions, shares, or net meter readings of the electrical output of a net metering system depending on if utility or aggregator is providing software for meter aggregation;
     (c) Registers the net metering system with the western renewable energy generation information system and accounts for all renewable energy credit transactions on that system; and
     (d) Registers with the secretary of state as required by statute as either: A limited liability company; a profit corporation; a nonprofit corporation; a limited partnership; or a limited liability partnership.
     (17) "Assigned fraction" means the percentage of kilowatt-hours generated by a net metering system deducted from the electrical consumption of a customer-generator. Unless there is a voluntary agreement for smaller fractions, an assigned fraction may not be smaller than:
     (a) One-tenth of a percent (1/1000) and on average produce no less than one thousand kilowatt-hours annually for utilities with more than twenty-five thousand ratepayers; or
     (b) One percent (1/100) and on average produce no less than two thousand kilowatt-hours annually for utilities with less than twenty-five thousand ratepayers.
     (18) "Operating fraction" means the percentage of kilowatt-hours generated by a net metering system that is:
     (a) Specified by the net metering aggregator;
     (b) Not assigned to a customer-generator for virtual net metering; and
     (c) Sold by the virtual net metering aggregator to the utility at the rates, terms, and conditions that would otherwise apply to a renewable energy generation system of the same size as the net metering system.
     (19) "Distribution system" means all of the distribution lines, substations, switches, and other distribution hardware contiguously connected at voltages below ninety kilovolts that are:
     (a) Owned and operated by a single utility; or
     (b) Owned and operated by two or more utilities with adjoining distribution systems agreeing to combine their distribution systems for the purpose of virtual net metering.
     (20) "Full requirements customer" has the same meaning as defined in RCW 19.280.020.

Sec. 5   RCW 80.60.020 and 2007 c 323 s 2 are each amended to read as follows:
     (1) An electric utility:
     (a) Shall offer to make net metering available to eligible customers-generators on a first-come, first-served basis until the cumulative generating capacity of net metering systems equals 0.25 percent of the utility's peak demand during 1996. On January 1, 2014, the cumulative generating capacity available to net metering systems will equal 0.5 percent of the utility's peak demand during 1996. Not less than one-half of the utility's 1996 peak demand available for net metering systems shall be reserved for the cumulative generating capacity attributable to net metering systems that generate renewable energy;
     (b) Shall allow net metering systems to be interconnected using a standard kilowatt-hour meter capable of registering the flow of electricity in two directions, unless the commission, in the case of an electrical company, or the appropriate governing body, in the case of other electric utilities, determines, after appropriate notice and opportunity for comment:
     (i) That the use of additional metering equipment to monitor the flow of electricity in each direction is necessary and appropriate for the interconnection of net metering systems, after taking into account the benefits and costs of purchasing and installing additional metering equipment; and
     (ii) How the cost of purchasing and installing an additional meter is to be allocated between the customer-generator and the utility;
     (c) Shall charge the customer-generator a minimum monthly fee that is the same as other customers of the electric utility in the same rate class, but shall not charge the customer-generator any additional standby, capacity, interconnection, or other fee or charge unless the commission, in the case of an electrical company, or the appropriate governing body, in the case of other electric utilities, determines, after appropriate notice and opportunity for comment that:
     (i) The electric utility will incur direct costs associated with interconnecting or administering net metering systems that exceed any offsetting benefits associated with these systems; and
     (ii) Public policy is best served by imposing these costs on the customer-generator rather than allocating these costs among the utility's entire customer base;
     (d) Shall buy an operating fraction of the net metering aggregator of the net metering system using rates, tariffs, contracts, and conditions as would otherwise apply to the utility buying power from a comparable renewable energy generator.
     (2)(a) If a production meter ((and)), software, and associated interconnection equipment is required by the electric utility to provide meter aggregation under RCW 80.60.030(4), ((the)) customer-generators ((is)) or aggregators are responsible for the purchase of the production meter ((and)), software, and associated interconnection equipment. If an electric utility chooses to update its billing software to accommodate meter aggregation, the customer-generator may not be required to purchase software.
     (b) If the electric utility decides to update its billing software to accommodate meter aggregation, the aggregator must assign fractions to customer-generators and operating fractions in a manner consistent with this chapter.
     (c) If the net metering aggregator is required by the electric utility to provide software to accommodate meter aggregation, the aggregator must provide net meter readings to the electric utility in the form the electric utility uses to read meters.
     (3) A net metering aggregator, who must assign fractions to customer-generators and operating fractions as required under subsection (2)(b) of this section, shall submit an updated list of assigned fractions and operating fractions to the electric utility no more than once per quarter on a date determined by the electric utility. A net metering aggregator must provide information to the electric utility demonstrating that the assigned fractions and operating fractions equal one hundred percent.

Sec. 6   RCW 80.60.030 and 2007 c 323 s 3 are each amended to read as follows:
     Consistent with the other provisions of this chapter, the net energy measurement must be calculated in the following manner:
     (1) The electric utility shall measure the net electricity produced or consumed during the billing period, in accordance with normal metering practices.
     (2) If the electricity supplied by the electric utility exceeds the electricity generated by the customer-generator and fed back to the electric utility during the billing period, the customer-generator shall be billed for the net electricity supplied by the electric utility, in accordance with normal metering practices.
     (3) If electricity generated by the customer-generator exceeds the electricity supplied by the electric utility, the customer-generator:
     (a) Shall be billed for the appropriate customer charges for that billing period, in accordance with RCW 80.60.020; and
     (b) Shall be credited for the excess kilowatt-hours generated during the billing period, with this kilowatt-hour credit appearing on the bill for the following billing period.
     (4) If a customer-generator requests, an electric utility shall provide meter aggregation.
     (a) For customer-generators participating in meter aggregation, kilowatt-hours credits earned by a net metering system during the billing period first shall be used to offset electricity supplied by the electric utility.
     (b) Not more than a total of one ((hundred kilowatts)) megawatt shall be aggregated among all customer-generators participating in a ((generating facility)) net metering system under this subsection.
     (c) Excess kilowatt-hours credits earned by the net metering system, during the same billing period, shall be either: (i) Credited equally by the electric utility to remaining meters located on all premises of a customer-generator at the designated rate of each meter; or (ii) in the case of virtual net metering, credited by the virtual net metering aggregator to remaining meters in proportion to the contracted specified fraction, share, or net meter reading for each customer-generator. An assigned fraction, share, or net metering reading shall be directly proportional to each meter's share of the net consumption or generation at its rate class as related to the total of all aggregated meters of a virtual net metering aggregator.
     (d) Meters so aggregated shall not change rate classes due to meter aggregation under this section.
     (5) On April 30th of each calendar year, any remaining unused kilowatt-hour credit accumulated during the previous year shall be granted to the electric utility, without any compensation to the customer-generator.
     (6)(a) All renewable energy credits produced as a result of the generation of electricity from a net metering system shall be the property of the customer-generator.
     (b) For renewable energy credits generated through virtual net metering, an assigned fraction or share of the renewable energy credit shall be assigned to the customer-generator by the virtual net metering aggregator."